Winning: The Answers: Confronting 74 of the Toughest Questions in Business Today by Jack Welch, Suzy Welch

for not reaching their stretch targets, and executives have to honor that confidence. Executives, meanwhile, have to believe that people in the field are giving their all to achieve those big goals, and people in the field have to uphold that good faith with their efforts.
    With that “contract” in place, the budget dynamic takes on a whole new life.
    So, don’t give up on budgeting at your company yet. You’re right to be frustrated by it now, but given how much is to be gained, maybe it’s time to start a conversation about changing the process. Are you ready?

NOT INVENTED WHERE?
     
 
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    Our automotive parts company employs about two thousand people and has a long history of technical and manufacturing expertise, but very little in the way of marketing. Here’s my problem: we currently have a product that is technically perfect, but customers aren’t buying it. (They prefer another, more advanced solution, made by a competitor.) Obviously, to stay competitive, we need to lower the price, but I just don’t see how. Our costs are so well managed that outsourcing, even from China, India, or Eastern Europe, seems pointless. Moreover, we have the most suitable manufacturing technology available, and our machinery depreciations are very low at the moment. What’s your advice?
     
    — PRAGUE, CZECH REPUBLIC
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    F or someone at a company of only two thousand people, you sure sound as if you have one of the most common symptoms of big company-itis: the not invented here syndrome, or NIH.
    You know NIH. It’s when managers become very comfortable with the notion that their company is performing at its peak—so comfortable, in fact, that they create an atmosphere where there is little interest in using ideas from outside sources to improve how things are done. NIH managers believe the company has everything figured out. After all, it’s been around for a while and had its share of successes. “This is the way we do it here,” they like to say. And should someone suggest a new practice, they typically come back with the refrain, “We’ve tried that before.”
    Now, big company-itis in general is awful. Along with NIH’s complacency, its other symptoms include inertia, bureaucracy, and risk aversion. But NIH trumps them all. It wrecks organizations, draining competitiveness right from the veins.
    So, let’s talk about cures.
    In fact, let’s look at your situation. You indicate that you have costs so under control that they can go no lower, even with outsourcing. You also seem to believe you have the best technology available, further obviating the need to seek alternatives outside the company. Overall, you seem genuinely stymied by your problem.
    But perhaps you see no way out because you’re too inwardly focused. To us, your problem seems pretty straightforward. A competitor appears to have built a better, cheaper “mousetrap” than you and gotten it to market faster. The solution feels straightforward too: why not let go of the notion that you’ve tried everything and try more of everything?
    Innovation, basically, is what we’re talking about. Your company has to become fixated on finding a new process, product, or service that creates a value proposition the market desperately wants to buy. Maybe a new practice is what you need—a different way of purchasing, or a new way of communicating with customers. Maybe a new technology will move you forward—something you can develop or get from another company through a license, merger, or acquisition. With an open mind you’ll find the world of improvement possibilities is huge. In fact, keep pushing on the outsourcing front. Despite your excellent machines and low depreciation, there has to be a company in a country out there that can make your product’s components or the finished product itself for less.
    Your greatest advantage at this time, ironically, may be your size. Your company is too small to have big company-itis! With two thousand